Providing Environmental Technical Support Since 1989 

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R Incorporated

1 MEMORANDUM

TO: Melanie King, EPA OAQPS/SPPD/ESG

FROM: Bradley Nelson, EC/R, Inc.

DATE: August 31, 2009

SUBJECT: Summary of the August 18, 2009 Meeti ng in Research Triang le Park, NC with

Exterran and the U.S. Environmental Pr otection Agency to discuss the Proposed NESHAP for Existing Stationary RICE

1.0 INTRODUCTION

Exterran requested this meeting with EP A to discuss their comments on the proposed national emission standards for hazardous air po llutants (NESHAP) for existing stationary reciprocating internal co mbustion engines (RICE). Also at this meeting were representatives from Compressor Systems Inc. and J-W Power Co mpany, and their legal counsel from the law firm of Bracewell & Giuliani. Exterran, J-W Powe r, and Compressor Systems, Inc. are the three largest operators of contract compression to the U.S. oil and gas industry. The companies estimate that contract compression comprises appr oximately one-third of the compression in the oil and gas industry. This meeting summary will be available in the docket for this rulemaking (Docket ID No. EPA-HQ-OAR- 2008-0708). The proposed NESHAP for existing stationary RICE was published in the Federal Re gister on March 5, 2009 (74 FR 9698).

2.0 ATTENDEES

U.S. Environmental Protection Agency

Bob Wayland, OAQPS/SPPD/ESG Melanie King, OAQPS/SPPD/ESG Michael Horowitz, OGC (by phone)

Exterran

Gerald Meinecke

Mike Wasson

Bill Bowes James Harrison (by phone) Kyle Jantzen (by phone)2 Bracewell & Giuliani

Jeff Holmstead

Rebecca Rentz Richard Alonso (by phone)

JW Power Co.

John Dutton

Compressor Systems Inc.

Levent Caglar David O’Leary

EC/R Incorporated

Bradley Nelson

3.0 SUMMARY OF MEETING

The companies provided an agenda summarizing the issues that they wanted to discuss with EPA. A copy of the agenda is included in Attachment 1 of these meeting minutes. Jeff Holmstead began the meeting by stating that th e companies represent small (<500 horsepower (HP)) natural gas fired e ngines located mostly at rural locations.

The first topic of discussion was the subcategor ization of engines located in rural areas. The industry representatives asked if EPA was co nsidering using the urban and rural guidelines

that were used for the Oil & Gas Production NE SHAP. EPA responded that it is looking at the issue, but that no final decisions had been made.

The industry group asked what management pract ices are being are be ing considered for the final rule for engines less than 500 HP at area sources. EPA stated it was looking at management practices that were provided in the comments, and asked industry which management practices reduce emissions from the engines. The industry group responded that the companies already have an operator defined mana gement program used to prolong the life of the engine. These practices include: monitoring of th e spark plugs and changing of the oil. Industry stated that many of the facilities test the oil to make sure the oil properties are sufficient for lubrication of the engine. Industry also stated that replacement of the oxygen sensor could also be used as a management practice. EPA agreed that these management practices are viable options, but stated that the ma nagement practices must have objective criteria that can be measured. Industry responded that there are a lot of variations in the ty pe of engines and the operations associated with each engines so it is difficult to propose objective criteria. Industry stated that the management programs should be operator defined. Industry asked if oil3 sweetening would be allowed in the final rule. EPA responded that the facility can petition for alternative compliance to the permitting author ity by providing technical justification for oil sweetening. EPA asked that i ndustry provide recomm endations for management practices by

October.

The next issue that was discussed was startup, shutdown, and malfunction (SSM). Industry estimated that their en gines have 3-4 shutdowns per m onth, and engines typically take approximately 15 minutes to heat up to temperat ure during startup. However, some engines in cold areas may take up to 45 minutes for startup. To address the SSM issue, industry suggested using the de minimis language from the Alabama Power court decision for natural gas RICE less than 500 HP. Other options suggested for SSM include: accounting for SSM emissions in the floor calculations; subcategorizi ng the SSM events and establishi ng separate limits; or work practices. Industry suggested th at EPA could address the SSM i ssue by setting a not-to-exceed limit for SSM events for each month, or set a pound per hour limit for SSM events. EPA responded that no additional test information was received for these engines during the comment period.

The next issue that was discussed was the test protocol letter that was sent to EPA by Bracewell & Giuliani that outlines the proposed colle ction of emissions test data for natural gasfired engines less than 500 HP to support the RICE NESHAP (See Attachment 2). Industry stated that they had three options:

 Option 1 - provide as much test da ta as possible before October;

 Option 2 - request and receive an extension of the rule and collect additional data; or

 Option 3 - collect no data and challenge the final rule.

Industry wants to ensure that if they choose Option 1 that the colle cted test data will be used by EPA to establish new limits. EPA responded th at any data received in October would be included in the MACT floor analysis for the engi nes. Industry asked if the emission data should be provided in grams per brake horsepower-hour at full load. EP A stated that the tests should consider variability and provide da ta that is achieved in practice.

Industry stated that most of the 2-stroke lean burn engines less than 500 HP are Ajax engines and that these engines do not produce en ough heat to allow an oxidation catalyst to operate effectively. Industry stated that they curr ently have 14 engines that use a catalyst, but the use of a catalyst increases n itrogen oxides emissions.4 Attachment 1 Agenda for Exterran Meeting with EPA August 18, 200956 Attachment 2

Test Protocol Letter August 17, 2009